Teachers are being offered a mortgage that, for a year, will cost them only a third each month of the cost of a normal mortgage, a saving of nearly Pounds 3,400 on the average home, writes Martyn Cornell.
The offer comes from the Teachers' Building Society, whose chief executive, Hugh Nicholls, says its fixed-rate mortgage, at just 3 per cent for the first year, has been attracting "a heavy enquiry rate" since its launch on August 1.
Mr Nicholls said: "At the end of the year borrowers go back to our normal rate, which is 8.1 per cent. There won't be any penalty, as there is in some fixed-rate mortgages."
The offer is being funded "entirely out of profits", Mr Nicholls said, and he expects the scheme to be over-subscribed - "I don't want to say how much money we have put aside for this, but we obviously can't sustain too many."
Although the TBS, which is based in Wimborne, Dorset, does lend to non-teachers, the fixed rate offer is only available to teachers.
For a Pounds 65,000 endowment mortgage on an Pounds 85,000 house the fixed-rate offer would mean payments of around Pounds 155 a month after mortgage-interest tax relief for 12 months, compared to about Pounds 438 a month with a normal mortgage. The first-year saving over the life of the fixed rate would thus be Pounds 3,396.